GTECH 3Q revenue rises 28%, Lottomatica says

By Susan A. Baird
PBN Web Editor

ROME and PROVIDENCE – Lottery services and technology provider Lottomatica S.p.A. (Pink Sheets: LTTOY; Milan Stock Exchange: LTO) today posted a third-quarter profit of €38.62 million ($49.28 million at today’s exchange rate), more than doubling from the year-ago €15.62 million ($19.92 million), on total revenue that rose 22.49 percent to €473.08 million ($603.55 million) led by gains at its GTECH Corp. subsidiary.

Earnings per diluted share more than tripled to €0.19 (24.22 cents) from the 2007 third quarter’s €0.06 (7.65 cents), the company said. Results for the quarter ended Sept. 30 included a €12.28 million ($15.66 million) gain from favorable currency exchange rates, compared with a year-ago loss of €12.84 million ($16.36 million at today’s exchange rate). (READ MORE)

“Despite a huge upheaval the world’s economies, the strategy that we have been executing for Lottomatica Group remains on course and is delivering very good results,” Lorenzo Pellicioli, chairman of the Lottomatica Group, said in a statement today.

GTECH’s third-quarter revenue rose 28 percent year-over-year “on a constant currency basis” to €239.9 million ($307.76 million), the company said. Results for the July-to-September period included revenue of €182.5 million ($233.48 million) from GTECH’s lottery division, €40.9 million ($52.32 million) from gaming solutions and €16.5 million ($21.11 million) from the company’s interactive division.

“Approximately 51 percent of GTECH’s service revenue in the current quarter was derived from U.S.-dollar-denominated lottery contracts,” the parent company said, noting that same-store service revenue grew 3 percent compared with the 2007 third quarter.

Interactive growth was strong, with GTECH’s Boss Media and St. Minver posting revenue 34 percent higher than in the year-ago period. Boss Media “extended key contracts; launched a new casino brand, in association with Paddy Power; and [grew] its International Poker Network,” the company said. “St. Minver expanded its International Bingo Network and signed several new customers, including British newspaper The Daily Mail.”

Meanwhile, the Italy-based Lottomatica segment saw revenue grow 22.6 percent year-over-year to €234.0 million ($299.86 million). That included €92.7 million ($118.60 million) in lotto revenue, which fell 6.27 percent compared with a year ago; and €72 million ($92.11 million) in instant-lottery revenue, which rose 19.5 percent, the parent company said.

“In Italy, we have once again delivered a very impressive performance in the third quarter, across all product lines,” Pellicioli said. “At GTECH, we have had an extremely successful quarter of commercial developments, with new contract wins and extensions.

“Our strategy of global diversification affords us a natural hedge against market fluctuations and a broad perspective on opportunities,” he added. “All of these factors – combined with our successful debt refinancing – [are] evidence of the sustainability of our business during unprecedented economic uncertainty.”

Among other third-quarter highlights, GTECH:

• Teamed up with Sport Pari to launch the first online lottery in Belarus (READ MORE).

• Created a sports-betting system in Ghana.

• Signed online lottery contracts with West Virginia, Michigan and new customer South Dakota (READ MORE), and renewed its online deals with Chile and the Dominican Republic.

• Signed a three-year contract with the Georgia Lottery, a customer since 1993. The latest extension is expected to generate about $125 million in revenue over a term that begins in the 2010 third quarter. GTECH also extended lottery contracts in California, Illinois, Finland, Ireland and Morrocco.

• Announced a partnership with Lottery Dynamics Corp. to develop new game ideas. (READ MORE)

• Opened the 10th of 30 planned local youth computer labs, this one at Elmwood Community Center in Providence. (READ MORE)

• Its GTECH Printing Corp. (GPC) subsidiary – which recently announced plans to expand in Florida (READ MORE) – signed instant-ticket printing contracts with lotteries in Florida, Kansas, Oregon, Washington state and Mexico.

• And its Boss Media subsidiary, together with Lottomatica, launched a new poker network in July – under Italy’s recent Internet skill-gaming legislation – that this month began offering cash prizes.

After the quarter’s end on Sept. 30, GTECH landed a contract with the Maryland Lottery, to provide 1,000 instant-ticket vending machines. Its Spielo subsidiary was signed to provide the Oregon Lottery with 2,500 new prodiGi Vu terminals. And GTECH and Spielo were selected to supply and operate a central system to monitor electronic gaming at a half-dozen facilities in Kansas.

So far this year, GTECH and its subsidiaries were awarded a total of 26 contracts – including extensions – which in 2009 “are expected to contribute approximately €125 million to €135 million in revenue,” Lottomatica said. About €40 million to €45 million of that total will come from new contracts.

“Our business has performed very well in the third quarter,” said Stefano Bortoli, Lottomatica Group’s chief financial officer and senior vice president, said in a statement today. “Group revenue experienced double-digit growth versus the same period the previous year. … Earnings per share and net income have also shown remarkable growth. And a major refinancing of our debt was successfully arranged,” Bortoli said.

This month, Lottomatica closed on a five-year, €350 million ($448.17 million) senior loan facility. The unsecured term loan was arranged by Barclay’s Capital, Intesa San Paolo, Mediobanca and Unicredit, which were joined in the loan package by fellow lender Natixis. The company said it will use the proceeds – plus additional cash – to cover €360 million ($560.42 million) in bonds that mature on Dec. 22.

GTECH Corp. – a wholly owned subsidiary of Italy-based Lottomatica S.p.A. – has provided lottery technology and services to the R.I. Lottery since 1978. Together, the gaming technology, services and lottery operations companies have 5,900 employees in more than 50 countries. Additional information, including past corporate financial reports, is available at www.gtech.com or www.GruppoLottomatica.it/eng.